Madoff trustee can appeal JPMorgan $19 billion loss

By IBT Staff Reporter On 12/01/11 AT 7:24 PM

The trustee seeking money for Bernard Madoff's victims won the right to immediately appeal a ruling that took away more than $19 billion of his claims against JPMorgan Chase & Co, Madoff's main bank for two decades.

U.S. District Judge Colleen McMahon in Manhattan last month took away all but $425 million of trustee Irving Picard's $19.9 billion lawsuit against the largest U.S. bank.

McMahon found that Picard, as trustee for the estate of Bernard L. Madoff Investment Securities LLC, lacked power to bring a variety of claims against the bank for harm caused to former Madoff customers.

Instead, the judge said, those claims belonged to the customers themselves. At least two lawsuits on behalf of some of those customers have since been filed.

Rather than pursue what remained of his case in a federal bankruptcy court, Picard reached an agreement with JPMorgan this week to allow an appeal of McMahon's ruling to the 2nd U.S. Circuit Court of Appeals in New York.

Counsel for all parties agreed to seek expedited treatment for any appeal, McMahon wrote by hand in an order made public on Thursday.

Picard has said an immediate appeal would provide much needed finality as to whether his claims are viable, and could even make a settlement more likely.

JPMorgan has said it will defend its case, and maintained that there was no showing that anyone at the bank knew of Madoff's Ponzi scheme.

Madoff, 73, is serving a 150-year prison term.

Rulings against Picard by McMahon and her colleague Jed Rakoff, if they survive on appeal, have wiped out roughly one-third of the trustee's more than $103 billion of asserted claims against banks and other defendants.

Picard has said he has recovered $8.7 billion for former Madoff customers, excluding a $326 million agreement reached last month with the Internal Revenue Service.

The case is Picard v. JPMorgan Chase & Co, U.S. District Court, Southern District of New York, No. 11-00913.

(Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz)